Bill gives landlords incentive to make energy-efficient upgrades

Posted: Tuesday, January 23, 2007

By James Carlson

The Sierra Club and Kansas City Power and Light may seem like strange bedfellows. But the organizations joined others on Monday in support of a bill that would give tax credits and deductions to landlords who make energy-efficient improvements to rental properties over the next three years.

"This is a win-win-win situation," said Tom Thompson, representing the Kansas chapter of the Sierra Club.

He said the landlords would get tax breaks for the improvements, tenants would see lower utility payments and the environment would absorb less pollutants.

The proposal would give a $300 income tax credit to landlords for installing new energy-efficient air conditioning, ventilation or heating units in a dwelling. The bill also would allow landlords to take income tax deductions over a five-year period based on a percentage of the cost of purchasing and installing such units.

A similar bill passed the House last year but arrived in the Senate late in the session and died there.

The bill applies only to rental properties, as the federal government already offers homeowners incentives to become more energy-efficient. Committee members pointed out that landlords often don't pay utilities for their apartments and so they don't have a reason to make their properties more efficient.

"It's intended to provide incentives to those who don't have any incentives and often don't have the capital," said Rep. Tom Hawk, D-Manhattan.

More than 40 percent of KCPL customers live in multi-unit residences, such as apartments or duplexes, said George Phillips, manager of commercial and industrial markets for KCPL.

That is a reason to pass the bill, said Bruce Snead, state extension specialist in residential energy with Kansas State University. He said Kansas needs to make up ground in energy efficiency compared to other states.

The expected cost to the state for a similar bill proposed last session was $2.5 million. Richard Cram, director of policy and research for the Kansas Department of Revenue, said the cost would be similar this year.

Some committee members on Monday asked how property owners would learn of the potential new incentives.

Ed Jakinski, lobbyist for The Associated Landlords of Kansas, said his organization would ensure that all of its members knew about the bill.

"It's certainly going to help landlords," he said. "It's certainly going to help tenants because it decreases utility costs."